“Bangladesh’s pharmaceuticals sector will grow 15 % year-on-year to reach $5.11 Bn by 2023, propelled by high investments by local companies as they seek to grab a bigger share of the global market, said a new study yesterday.”- The Daily Star.
As demographics shift, the industry also undergoes transformation to keep pace with the changing needs of the consumers. As a modern industry, Pharmaceutical started its journey at the mid of 1880’s. Pharmaceutical is one of the most prominent as well as flourishing sectors of Bangladesh. It started booming with the announcement of drug control ordinance (1982) and now it is 2nd largest industry in Bangladesh.
There are about 209 registered companies in Bangladesh right now according to Bangladesh Association of Pharmaceutical Industries (BAPI). 97% of local demand is met by these manufacturers and is exported to 100 countries worldwide. In Bangladesh 80% drugs are generic and rest 20% drugs are patented drugs. There are 5 types of medicine manufacturing companies in Bangladesh.
Major players and their market share
Top 10 companies hold 60% of Pharma market share according to IMS Health Care Report 1st Qtr (2017-2018). Top 20 companies hold 80% market. It is a highly concentrated market lead by few local companies. The barriers to entry in this sector are high because of large capital investment and legislative bindings. Square Pharmaceutical is the leader of this market with 17.73% market share followed by Incepta, Beximco, Opsonin and Renata. There are 14 Multinational companies and they hold only 9.39% of market shares. 4 MNCs are in top 20 (Sanofi, Novo Nordisk , Novartis, GSK).The table below shows the current market share hold by leading 20 pharmaceutical companies:
Leading companies have major approvals (US FDA, EU GMP, UK MHRA, TGA Australia, ANVISA Brazil etc.) The advantages for the manufacturers are strong manufacturing base; skilled manpower and largest white collar labor intensive employment sector
The market cap of Pharmaceuticals in Bangladesh is about BDT 560,693 Mn which is about 11.58 % of total market cap. There 28 listed Pharmaceuticals company in DSE. Of them 5 pharmaceutical are in DS30.In last year the top 3 gainers are Health Care Pharma (0.79%), Sun Pharma (0.26%) and Radiant Pharma (0.24%). The top 3 losers were Square Pharma (-1.10%), Drug International (-0.15%) and Eskayef (-0.14%) according to EBLSL.
The raw materials needed for pharmaceutical Industry in Bangladesh are mainly imported for manufacturing drugs. 15 major companies of Bangladesh produce 40 APIs. Among those, Active Fine is the only company which is fully involved in producing API. Only Ganashastha Pharmaceuticals Limited (GPL) accounts for about 60% of the raw materials manufactured in Bangladesh according EBLSL. Bangladesh imports raw material from India, China, Italy and Germany. However, one of the barriers to this industry is the amount of money spent for importing raw materials. The value of import LC outstanding from July 2017 to November 2017 was USD 1625.39 million according to Bangladesh Bank. The companies in Pharma industry which are public limited company have to pay 25% tax. In Pharma industry there are 700 tariff lines and they enjoy average protective rate of 14.2%.The custom duty in Pharma for vegetables and plant raw material is 10%, for Dioctyl orthphthalates pharmaceutical grade is 25% and for Hygienic or Pharmaceutical Articles of Vulcanized Rubber and Laboratory, Hygienic or Pharmaceutical Glassware, Of Fused Quartz is 5%.
The present Government of Bangladesh has given high emphasis on the export of Pharmaceutical products from Bangladesh. It is the second probable exporting product after readymade garments. In the last two years about 1,200 pharmaceutical products received registration for export according to Bangladesh Association of Pharmaceutical Industries (BAPI). The pharmaceutical sector of Bangladesh has achieved a great reputation worldwide for its quality products. This can be seen by the increasing number of export orders the companies are getting from foreign buyers. This year (2017) many of them start to export high quality product in high rated pharma market including USA, UK, and Australia. In this connection, several pharma manufacturers have already made huge investments in their new state of art manufacturing facilities. A number of companies have already obtained or in the process of obtaining UKMHRA, EU, TGA, and GCC certifications. They are also looking for high rated pharma markets to export their products in upcoming year 2018. In the fiscal year 2017-18, Bangladesh exported pharmaceuticals product to 107 countries ensured by Bangladesh Export Promotion Bureau. Top 7 countries (Afganistan,Costa Rica, Kenya, Combodia, Mynmar,Nigeria, Somalia, Viet Nam) from which only 37% share is exported to Afganistan.. Bangladesh has exported pharmaceutical products worth USD 654,261.6 Mn during this period (Source: Bangladesh Export Promotion Bureau )
Pharmaceuticals industry contributed 1.85% to GDP. It is largely protected from external competition by the restriction regarding import of similar drugs manufactured locally. It provides the largest white collar employment in Bangladesh. This industry has grown significantly over the last five years. From 2010 to 2016, it shows 15% CAGR. In 2013 the growth rate was 23.8%. But the growth rate was low from 2012-2015. And in the year of 2016 the growth rate was in the highest %age.
Total market size of Pharma in Bangladesh is about USD 2 billion. Revenue of the World Pharma market USD 1,105 billion. The Quintiles IMS Institute predicts that the pharmaceutical market will reach nearly USD 1,485 billion by 2021, an increase of USD 350-380 billion from the USD 1,105 billion recorded in 2016. This growth is coming mainly from market expansion in 117 foreign countries and demographic trends in developed countries due to an ageing population. World largest pharma company is Johnson & Johnson and their revenue was USD 76.5 billion.
BD key products
Depending on the annual sales and consumer satisfaction in the year 2017 top 10 pharmaceutical brands in Bangladesh are given below –
Napa (Beximco), ACE (Square), Seclo (Square), Cef-3 (Square), Maxpro (Renata), Pantonix (Incepta), Sergel (Healthcare), Mixtard (Novo Nordisk), Losectil (SK+F), Finix (Opsonin).
Emerging pharma market
Emerging market pharmaceutical spending stood at USD 249 billion in 2015, and is expected to reach USD 345-375 billion by 2020 (IMS, 2016), driven by escalation in per capita volume and spending, and government’s strong commitment of wider access to healthcare. While most of emerging and LMIC drug markets are dominated by multinational pharma companies, Bangladeshi pharma companies have the capacity to penetrate these markets.
Two organizations regulate drugs and pharmacies in Bangladesh.
The Directorate General of Drug Administration (DGDA) is the national drug regulatory authority which is under the Ministry of Health and Family Welfare. It regulates all activities related to import and export of raw materials, packaging materials, production, sale, pricing, licensing, registration of all sorts of medication.
The Pharmacy Council of Bangladesh (PCB) used to be established under the Pharmacy Ordinance Act in 1976 to manipulate the pharmacy practice in Bangladesh. The Bangladesh Pharmaceutical Society is affiliated with the International Pharmaceutical Federation and Commonwealth Pharmaceutical Association. One of the key rules points is the restrictions on imported capsules, a ban on neighborhood manufacturing of about 1,700 tablets that are considered non-essential or dangerous and strict price controls on some 117 most important medicines.
In 2015, the World Trade Organization (WTO) Council extended patent waivers for pharmaceuticals products for its members in the Least Developed Countries category to January 2033. As an LDC, Bangladesh would not need to pay royalty for producing patent drugs till 2032, which is a great opportunity for Bangladesh to improve its export share in the pharma products. On the other hand, around 1,200 pharmaceutical products got registration for export, which is likely to result in a massive jump in earnings within the next three years. The government should provide gas connections to the API Park as soon as possible to help pharma companies start production there.
Bioequivalence labs and modern research facilities equipped with skilled scientists are necessary for capturing the global market. Currently, pharma companies in Bangladesh primarily use facilities in Malaysia and India for similar tests. To facilitate local pharma companies, a Canada-Bangladesh joint initiative, named Bangladesh Clinical Research Organization was proposed in 2015. The proposed lab would require USD 50 million to be built over four years. Such a facility can also help Bangladesh pharma industry enter the global healthcare research market, an industry expected to reach USD 45.2 billion by 2022.
The pharmaceuticals industry is gearing up to expand as 19 companies have got the go-ahead in the last one year to set up facilities at a combined investment of around BDT 6548 Mn.The entry of these new companies will boost competition as there are already more than 200 manufacturers in operations to grab shares in the local market worth around BDT 250,000 Mn.
Bangladesh pharma industry has made amazing strides over the last decade, and the domestic market has almost doubled all through 2011-2019. In the long run, however, the industry is possibly to enjoy a material shift from present boom trajectory and develop at remarkable pace. Investing in and creating healthcare related infrastructure will play an indispensable role for transformation of the industry, and sweeping changes throughout the cost chain will enable the industry to penetrate international market. We believe that Bangladesh pharma industry has the possible to evolve as a world leader in producing excessive first-rate generic drugs, and turn out to be the next ‘thrust’ sector after RMG.